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  • Guide to Owning Property in the Philippines as a NRF or Dual Citizen

    The law of property determines who owns something, but the market determines how it will be used.”

    – Ronald Coase, British Economist & Noble Laureate

    By Realttorney®
     
    If you’re a Filipino-American, a dual citizen, or a non-resident Filipino (NRF), owning property in the Philippines might feel like coming home – literally and emotionally. But as with anything involving real estate and international ownership, you’ve got to understand the legal and tax rules that come with the territory.
     
    First of all, let’s define: Who is a Non-Resident Filipino or Dual Citizen? Understanding your legal identity is the first crucial step in the process of desiring to buy real estate in the Philippines.
     
    ✅ Dual Citizen
     
    How do you become a dual citizen? Rep. Act No. 9225, known as the “Citizenship Retention and Re-acquisition Act of 2003,” allows natural-born Filipino citizens who have lost their Philippine citizenship because of their naturalization as citizens of a foreign country to be deemed to have re-acquired Philippine citizenship upon taking the oath of allegiance to the Republic specified in the said law.
     
    👉 So, if you are a former natural-born Filipino who has already re-acquired Philippine citizenship, then you retain your U.S. citizenship. As such, in the eyes of the law, you’re now 100% Filipino with all the rights and responsibilities of any other citizen, including ownership of real estate without restrictions.
     
    ✅ Non-Resident Filipino (NRF)
     
    This group includes (1) OFWs; (2) Filipino immigrants who retained Philippine citizenship; and (3) Filipino citizens who live abroad for long periods (but haven’t renounced their citizenship).
     
    👉 The key for this group is that as long as you retain Philippine citizenship, you’re allowed to own land, condominium units, house and lot, and townhouses, etc. – even if you live abroad.
     
    ✅ Former Filipinos
     
    As a side note, former natural-born Filipinos who do not wish to apply for dual citizenship or are not qualified to re-acquire Filipino citizenship according to Rep. Act No. 9225 may still acquire land under the provisions of Batas Pambansa Bilang 185.
     
    Under this law, former natural-born Filipinos can be a transferee of a private land up to one thousand (1,000) square meters, in the case of urban land. But, a former natural-born Filipino may be a transferee of a private land up to an area of one (1) hectare in the case of rural land. The final restriction here is that the private land to be purchased (whether urban or rural land) should be used by the transferee as his residence and not for business purposes.
     
    🏠 What Are Your Property Ownership Rights?
     
    Here’s the good news: if you’re a dual citizen or an NRF, you enjoy full rights to own real estate in the Philippines.
     
    You can legally acquire:
    ✅ Residential lots
    ✅ House-and-lot properties
    ✅ Condominiums
    ✅ Agricultural land
    ✅ Commercial property (with necessary business permits from the LGU)
     
    Just like any Filipino citizen, you can:
     ✅ Buy, sell, or inherit real estate
    ✅ Transfer property to heirs or family
    ✅ Register the title in your name
    ✅ Use the property as rental income, a vacation home, or a retirement residence
     
    📌 Reminder: Foreigners are prohibited from owning land. They may only own condo units or lease land for the long term. Read here if you want to learn more about this topic.
     
    ⚖️ Legal Considerations for Overseas Buyers
     
    Here are some legal factors you must stay on top of as an overseas property owner:
     
    1. Special Power of Attorney (SPA)
     
    Since you’re not physically present in the Philippines, any legal transactions (e.g., signing contracts, submitting documents, paying taxes) will require an SPA authorizing someone in the Philippines to act on your behalf.
     
    ✔️ The SPA must be notarized by the Philippine Consulate in your country.
    ✔️ It should specify exact powers (e.g., to sign, sell, lease, or mortgage property).
    ✔️ Submit this SPA to the Register of Deeds and BIR for proper recognition.
     
    2. Title Registration
     
    Make sure that:
    ✔️ The property is titled under your legal name, and it matches your government ID or Philippine passport.
    ✔️ If the property is inherited or gifted, go through the legal process of estate settlement and register the transfer accordingly.
     
    ⚠️Don’t leave land titles under the names of deceased relatives or informal agreements. This can lead to legal disputes or costly litigation later on.
     
    3. Zoning and Land Use
     
    Some land types (e.g., agricultural, residential, or commercial) have restrictions on what you can build or do with the property.

    ✔️ You may need a conversion certificate if you plan to create a farm tourism business.
    ✔️ Check with the LGU (Local Government Unit) for zoning laws, building permits, and usage rules.
     
    💸 Tax Implications for Dual Citizens and Non-Resident Filipinos
     
    Now, let’s talk about everyone’s favorite topic: taxes. As a property owner in the Philippines, even if you live abroad, you’re still liable for certain taxes.
     
    📌 1. Real Property Tax (RPT)
    ✅Paid annually to the LGU.
    ✅Based on the assessed value of your property.
    ✅Ranges between 1%–2% depending on the classification and assessment level of the property.
     
    💡 Pay before January 31 each year to avoid penalties. Or better yet, you can pay the RPT in advance and get a twenty percent (20%) discount for the incoming full year’s RPT. You can assign this task to a representative in the Philippines.
     
    📌 2. Capital Gains Tax (CGT)
    ✅Applicable when you sell a property, whether you incur an actual gain or not.
    ✅The rate is 6% of the gross selling price or the current schedule of market value (whichever is higher).
    ✅Paid by the seller (but often negotiated).
     
    📍Even if you’re a non-resident, you must file and pay CGT through the Bureau of Internal Revenue (BIR) before title transfer.
     
    📌 3. Documentary Stamp Tax (DST)
    ✅Paid by the buyer at a rate of 1.5%.
    ✅Applies when executing a Deed of Absolute Sale, Donation, or Mortgage Agreement, among other documents.
     
    📌 4. Donor’s Tax
    ✅Applicable when gifting property to another person.
    ✅Taxed at 6% of the current schedule of market value of the donated property.
    ✅Exemptions apply for gifts up to P250,000 in value, annually.
     
    📌 5. Estate Tax
    When the owner passes away, the heirs must pay estate tax before they can legally transfer ownership.
    ✅Rate: 6% of the net estate (after deductions).
    ✅Heirs must file within 1 year from the date of death.
     
    ✔️ Pro Tip: Create an Estate Plan if you own real property here in the Philippines. It will make estate settlement easier for your immediate family later on.
     
    🌐 Do You Need to File Income Taxes in the Philippines?
     
    It depends on whether your property is income-generating.
     
    ✔️ If You Lease or Rent Out Your Property:
    ✅You are considered to be earning income in the Philippines.
    ✅You must register with the BIR and pay:
    ✅Income tax (depending on rental income)
    ✅Value-added tax (VAT) or percentage tax, if applicable
     
    You may hire a Philippine accountant to help you file the necessary returns annually. Failure to register and pay taxes can result in penalties.
     
    ❌ If You Do Not Earn Any Philippine-Sourced Income:
     
    You are not required to file income taxes in the Philippines. But you’re still responsible for property taxes, and you must properly report any sale or transfer of property.
     
    💼 Can You Open a Bank Account or Get a Loan as a Dual Citizen?
     
    Yes. In fact, most banks in the Philippines allow dual citizens and non-resident Filipinos to:
    ✅ Open peso or dollar accounts
    ✅ Apply for housing loans, auto loans, and even investment loans
     
    However, most banks will require:
    ✅ Proof of income (COE or payslips)
    ✅ TIN and government-issued ID
    ✅ Dual citizenship certificate (if applicable)
     
    Some banks have special programs tailored for OFWs and overseas buyers — check out BDO, BPI, Security Bank, or RCBC for their “home loan for foreigners or overseas Filipinos” programs.
     
    ✈️ Key Takeaways
     
    Owning property in the Philippines as a non-resident or dual citizen isn’t just a dream — it’s a well-supported legal right. But to make it stress-free and financially sound, you need to:
     
    ✅ Know your rights under Philippine laws
    ✅ Register everything properly with the Registry of Deeds and BIR
    ✅ Keep up with annual tax obligations
    ✅ Avoid common legal mistakes by hiring licensed professionals
     
    And always — always — leave a clear paper trail for your heirs or representatives, especially if your property is meant to be passed on.
     
    📚 BONUS: Quick Checklist
     
    Here’s your quick reference guide:
     
    ✅ Dual citizenship certificate or proof of Filipino citizenship
    ✅ Valid Philippine Tax Identification Number (TIN)
    ✅ Annual RPT payment receipt
    ✅ SPA (if managing from abroad)
    ✅ Legal ownership documents (TCT/CCT, tax dec, etc.)
    ✅ Draft or notarized Philippine will (if applicable)
    ✅ Hire a PRC-licensed real estate broker and a real estate attorney
    ✅ Consult a CPA, if earning rental income
     
    📞 Need Help with Your Property Taxes or Legal Setup?
     
    If you’re based in the U.S. and need help:
     
    ✅Filing your Philippine taxes
    ✅Drafting a Special Power of Attorney
    ✅Reviewing a Deed of Sale or Title
    ✅Creating an estate plan for your properties – real and personal – in the Philippines
     
    📩 Reach out to a licensed Philippine real estate lawyer or estate planning expert who specializes in overseas Filipino clients.
     
    ——-
     
    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.
     

  • 5 Critical Things to Know About the Real Property Valuation and Assessment Reform Act

    “Per World Bank estimates, the Philippines’ real property taxes account for only 0.37% of the Gross Domestic Product (GDP) with an overall collection efficiency of 71%.”

    – OIC-Director Brenda L. Miranda, BLGF Local Fiscal Policy Service

    House approves the Real Property Valuation and Assessment Reform Bill (https://blgf.gov.ph)

    By Realttorney®

    Sometime on April 2-4, 2013, ranking officials of our Department of Finance (DOF) presented “Property Tax Reforms in the Philippines” during the Fourth IMF-Japan High-Level Tax Conference at Hotel Nikko, Tokyo, Japan. During this event, the Philippines identified eight (8) Issues and Challenges regarding our property-related tax administration system.

    The eight are as follows: (1) lack of uniform property valuation systems and methodology; (2) outdated real property values; (3) political interference in property valuation; (4) limited use of information technologies in the appraisal process; (5) multiple taxes on property ownership and transfers; (6) relatively high transfer taxes, which discourage formal transactions; (7) weak enforcement of property-related taxes; and (8) no provision for formal education and training of assessors/appraisers

    The promulgation and adoption of DOF Department Order No. 37-09 [Philippine Valuation Standards, 1st Edition] on October 19, 2009, continues to address the first item above, while the passage of Rep. Act No. 9646 addressed the last item on the list.

    Meanwhile, the various Joint Memoranda of the DOF and the DILG enjoined all Local Government Units (LGUs) regarding the regular preparation of Schedule of Market Values (SMV) and the conduct of general revision of property assessment in their respective jurisdictions.

    Way back on May 12, 2012, the House of Representatives passed the Valuation Reform Bill [House Bill No. 6044] to address most of the 8 Issues and Challenges mentioned above. However, the Senate of the Philippines failed to pass the counterpart bill at that time until recently.

    In the 2022 State of the Nation Address (SONA), Pres. Marcos, Jr. identified the Real Property Valuation and Assessment Reform Act (RPVARA) as one of his Administration’s priority legislations, and a key tax reform under the Comprehensive Tax Reform Program under the Duterte Administration.

    On December 12, 2022, the House of Representatives passed on third and final reading, the Real Property Valuation and Assessment Reform bill [House Bill No. 6558]. Thankfully, this time, the Senate of the Philippines had counterpart bills on hand.

    In the Explanatory Note of Senate Bill No. 897, filed by Sen. Pia S. Cayetano on July 26, 2022, she stated that “there are various agencies conducting or requiring property valuation, with each agency using their own system and methodology of valuation” of the economy, including the real estate industry. Understanding these implications is crucial for real estate professionals, investors, and policymakers.

    Senate Bill No. 2386 was passed on the third and final reading on March 11, 2024, via a unanimous vote by all 23 Senators present. Both Houses of Congress ratified the final version of the bill on March 20, 2024. The President approved the bill as Republic Act No. 12001 on June 13, 2024.

    As a real estate service practitioner (RESP), what do you need to know about this crucial tax reform program that was signed into law in June 2024?

    1. Updated and Fairer Property Valuation: According to RPVARA, it is the policy of the State to promote the development of a just, equitable, and efficient real property valuation system. Thus, it aims to establish uniform appraisal standards and procedures. This should lead to more accurate and consistent valuations across the country, reducing unfair tax burdens on property owners.

    According to Ma. Pamela Quizon, Director of the Bureau of Local Government Finance (BLGF), this reform bill will address the current inefficiencies in the system such as overlapping valuation. She stressed that there are currently 23 national government agencies requiring valuations of 1,715 LGUs.

    However, each government agency uses its own systems and methodologies which is causing wide disparities between zonal values, market values, and private appraisers’ values. Thus, leading to varying and multiple values for the same parcel of land or real property.

    RPVARA strengthened and expanded the powers and functions of the BLGF as the primary or lead implementing agency of this reform bill. The BLGF shall be the agency responsible for ensuring that valuations or revaluations are completed per standards outlined in the RPVARA.

    Finally, under the RPVARA, an updated schedule of market values (SMV) will be used as the basis for local and national land and property-related taxes. There shall be only one valuation for a specific real property.

    The SMV refers to a table of base unit market values for all kinds of real property, except machinery within an LGU, prepared by assessors according to existing laws, rules and regulations. LGUs are mandated to update SMV and its revision once every 3 years under Section 219 of the Local Government Code of 1991, as amended.

    2. Transparency and Efficiency: RPVARA shall develop and maintain the Real Property Information System (RPIS). This is an up-to-date electronic database of the sale, exchange, lease, mortgage, donation, transfer, and all other real property transactions and declarations in the country and on the cost of construction or renovation of buildings and other structures, and on prices of plant, machinery, and equipment.

    For this purpose, the BLGF shall require the mandatory submission of necessary documents from the concerned officials or employees of government agencies and instrumentalities, and LGUs. Towards this end, the BLGF shall establish mechanisms for the electronic submission of the required documents. Upon the creation of the RPIS, the private sector may access the database subject to the guidelines of the BLGF and the payment of a reasonable amount as an administration fee.

    This electronic database will centralize data on real estate transactions and shall be an important tool for all valuers – especially private appraisers who can now accurately prepare Appraisal Reports based on actual data of “comparables” in a given property location. No more educated guesses with the aid of Google and real estate listing sites.

    3. Streamlined Government Services: The RPVARA mandates all LGUs to automate their real property tax administration operations, such as but not limited to, tax mapping technology, maintaining software-enabled valuation systems, undertaking regular data cleansing, and computerized records management, with the guidance of the BLGF, in coordination with the Department of Information and Communications Technology (DICT). This could benefit the clients of RESPs involved in transactions requiring these services.

    Moreover, automating processes through the RPIS could expedite government activities related to property, such as right-of-way acquisition and land transfer tax administration which will redound to the benefit of its stakeholders.

    4. Taxpayer Relief: Republic Act No. 12001 grants a two-year amnesty on penalties, surcharges, and interest on real property taxes and special levies that were unpaid before the Act took effect (Section 30). The amnesty may be availed of within two years after the Act’s effectivity. A delinquent owner may pay the taxes in one lump sum or in installments. The amnesty does not apply to properties already sold at public auction for tax delinquency, properties whose delinquencies are covered by a compromise agreement, or properties subject to pending court cases on real property tax delinquencies. As noted above, this provision was not indicated in SBN 2386 or HBN 6558, but it appears in the enacted law, and it is a welcome addition to this important piece of legislation.

    This provides an opportunity for clients to settle outstanding tax obligations without extra charges and fend off the levy of the property and its public auction by the concerned LGU. It is a timely relief for landowners as they battle the effects of inflation and high-interest rates from 2021 up to the present. Because the window runs for two years from the Act’s effectivity, clients should confirm the exact deadline with the concerned LGU.

    5. Increase Collection of Real Property Taxes: The reform will broaden the tax base for local and national property and property-related taxes. With a wider tax base, the collection of real property taxes is expected to increase based on updated property values, which is most important to increase collection efficiency, and overall tax revenue by LGUs and the Bureau of Internal Revenue (BIR).

    Oftentimes, outdated property values result in unrealized revenues and socio-economic benefits from delayed projects, and conflicting land values which result in right-of-way (ROW) compensation problems, lengthy court litigations arising from valuation disputes, delayed projects, and cost overruns.

    With the increased collection efficiency, it is expected that LGUs will be able to translate this into better basic services for its constituents and critical infrastructure projects by the National Government based on the increased revenue-based national real property transfer taxes.

    With fairer valuations and a more transparent system, RPVARA would lead to a steady increase in market values of real properties in the Philippines at regular intervals without increasing the tax rates or introducing new taxes. Therefore, it is incumbent on RESPs to advise our clients as to the timing of such increases to take advantage of relatively low prices when they desire to purchase real properties.

    In conclusion, the Real Property Valuation and Assessment Reform Act brings several positive changes in the valuation system and the real estate sector in the Philippines in general. The reform bill shall implement a more efficient valuation system and will use a single valuation base, which will eliminate wide disparities caused by overlapping valuations.

    This would lead to consistency in real property valuation as well as the predictability of valuation. As such, the adoption of true market-based values for taxation purposes will increase revenues without necessarily adopting new tax measures.

    RPVARA endeavors to increase the capacity of the government to generate revenues from real property through the RPT, national government real property transfer taxes, and other related taxes. In addition, RPVARA aims to reduce government costs particularly unnecessary expenses incurred due to conflicting appraisals which lead to court litigations, project delays, and cost overruns.

    As RPVARA aims to implement uniform standards and efficient processes in the real property tax system, the government hopes that this will instill more confidence in the country’s real estate industry. In the end, the government desires to motivate and inspire real estate investors and public confidence because the valuation is done professionally, properly, and following current local and international standards.

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.